As programs that address the housing needs of middle-income renters become increasingly common in an environment of limited resources, it is crucial to understand the characteristics of the households these programs are intended to serve. In a recent paper, “Subsidizing the Middle: Policies, Tradeoffs, and Costs of Addressing Middle-Income Affordability Challenges,” we not only examine middle-income housing programs, but also consider who these programs would potentially serve and describe the affordability challenges faced by middle-income renters.

In 2022, 14.4 million renter households (about one-third of all renters) earned between 60 and 120 percent of the area median income (AMI). These middle-income households have faced rapidly worsening affordability, though the extent of their challenges pales in comparison to that of lower-income households. Indeed, an astounding 80 percent of lower-income renters had cost burdens in 2022 (spending over 30 percent of their income for housing), representing a 2.5 percentage point increase since before the pandemic (Figure 1). By comparison, about 33 percent of middle-income renters were cost burdened in 2022, up 6.3 percentage points from 2019. Within the middle-income group, cost burdens decline quickly as incomes rise, from 47 percent of renters earning 60-80 percent of AMI, to 28 percent of renters earning 80-100 percent of AMI, and 17 percent of those earning 100-120 percent of AMI.

Figure 1: Relative to Lower-Income Renters, Middle-Income Burdens Are Modest but Have Climbed Rapidly in Recent Years

Note: Moderately (severely) cost-burdened households spend 30–50% (more than 50%) of income on rent and utilities.

Source: Author tabulations of US Census Bureau, American Community Survey 1-Year Estimates.

While lower-income households have exceedingly high cost burden rates in states across the country, the share of middle-income renters with burdens varies considerably. Just 6 percent of middle-income renters in North Dakota were cost burdened in 2022, while fully 55 percent were burdened in Florida (Figure 2). More than two in five middle-income renters had burdens in Hawaii (50 percent), Nevada (49 percent), California (49 percent), and Arizona (43 percent).

Figure 2: Middle-Income Renter Burdens Are Especially High in Florida and the West and Lower in the Midwest

Note: Moderately (severely) cost-burdened households spend 30–50% (more than 50%) of income on rent and utilities.

Source: Author tabulations of US Census Bureau, 2022 American Community Survey 1-Year Estimates.

Middle-income renter households with cost burdens also had more income left over after paying for rent and utilities compared to lower-income renters. Middle-income renters with burdens had about $2,900 in residual income per month in 2022, and even those earning 60-80 percent of AMI had $2,500 leftover to spend on all other essentials. By comparison, lower-income renters with burdens had just $600 per month leftover. Higher housing costs may limit middle-income households’ ability to build long-term savings for emergencies, retirement, or a downpayment, straining their ability to reach full financial stability. But lower-income renters likely make more urgent tradeoffs, spending less on food or healthcare and putting basic well-being out of reach.

Given that middle-income housing programs could divert crucial resources away from lower-income households, it is important to understand the characteristics and affordability challenges of the middle-income renters likely to be served by them. Relative to lower-income renters, middle-income renters had higher earnings (by definition) and otherwise greater earning potential. The median household income for middle-income renters nationally was $63,000 in 2022, nearly three times the median household income of lower-income renters ($21,000). Middle-income renters with cost burdens were also far more likely to be headed by someone with a bachelor’s degree (41 percent) compared with lower-income renters (19 percent) and were more likely to be headed by someone in their peak earning years.

Middle-income renters were also far more likely to be headed by a non-Hispanic white person and less likely to be headed by a person of color, pointing to the possibility of compounding racial inequities by shifting subsidies further up the income scale. Indeed, just over half of middle-income renters with cost burdens (51 percent) were headed by a white person, 22 percent by a Hispanic person, and 17 percent by a Black person. By comparison, 43 percent of lower-income renters with cost burdens were headed by a white person, followed by 24 percent of households headed by a Black person and 23 percent headed by a Hispanic person.

Many state and local middle-income housing programs were created specifically to address the affordability challenges of households in the workforce. However, these programs—which almost universally target households based on their area median income—would bypass the large majority of cost-burdened households in the workforce who have lower incomes. Indeed, among the 9.8 million renters working full time with cost burdens, the number of lower-income renter households with burdens (5.8 million) far exceeded the number of middle-income renter households with burdens (3.6 million) (Figure 3). Even working full time did not guarantee access to affordable housing, especially at lower levels of income; 79 percent of lower-income renters with at least one adult working full time were cost burdened in 2022. Even among middle-income households with someone working full time, about one-third (31 percent) had cost burdens.

Figure 3: Most Employed Renters Facing Affordability Challenges Have Lower Incomes

Notes: Moderately (severely) cost-burdened households spend 30–50% (more than 50%) of income on rent and utilities. Households working full time means at least one member of the household worked at least 35 hours per week and 48 weeks in the prior year. 

Source: Author tabulations of US Census Bureau, 2022 American Community Survey 1-Year Estimates.

As the number of middle-income housing programs and policies across the US grows, it’s important to contextualize the affordability challenges these households face and identify who these policies are likely to serve. Collectively, the demographic profile of middle-income renters suggests that middle-income housing policies and programs could disproportionately target households with fewer economic vulnerabilities and who face fewer barriers to opportunity in education, employment, and housing due to systemic racism. As designed, middle-income programs would also bypass large numbers of the workforce with affordability challenges, even when such goals are the stated intent of the program.

State and local policies to address middle-income housing needs should be carefully crafted to serve middle-income renters in the places with the greatest need and where the market cannot adequately serve those households without incentive. At the same time, middle-income subsidies should complement, and never replace, aid for lower-income renters. As these programs grow in number and popularity, policymakers should consider whether there are more cost-effective methods than direct subsidy. Alternative strategies could include loosening restrictive zoning ordinances to allow a broader range of housing types, expediting permit processes, removing parking mandates, and/or providing density bonuses for projects that hit a specified affordability level. These approaches can help reduce the overall cost per unit, creating affordability for middle-income renters without investing public dollars or diverting resources away from lower-income households.